The independent b/d industry successfully lobbied to amend a bill recently introduced in California that would prohibit the “willful” misclassification of independent contractors who fit the definition of an employee.
The Financial Services Institute, the industry’s trade group, did not get an industry exemption into the bill as it initially hoped, but it did manage to convince the sponsor to amend the bill, removing the record keeping and “notice” requirements.
With the amendments to the bill, FSI has now changed its position to “neutral,” said Matt Schwartz, FSI’s government affairs counsel. The record keeping and notice provisions were the part of the bill FSI was most opposed to, having argued that the requirements would add unnecessary costs and increase compliance burdens for independent broker/dealers.
“The California Legislature should rather focus on how to cut the paperwork and regulatory burden that hinder economic activity at this time when we are recovering from a severe economic slump,” FSI wrote in an Aug. 9 letter to Senator Ellen Corbett, sponsor of the bill.
Schwartz speculates that word of FSI’s efforts—which included 500 comment letters sent to assemblymen, 25 member face-to-face meetings with assemblymen, and the Aug. 9 letter— made their way to Corbett. While FSI was previously pushing for an exemption, the group shifted its focus to amending the record keeping and notice requirements once it found out state legislators weren’t willing to exempt individual industries. In the Aug. 9 letter, FSI said that if those changes were made to the bill, the group would change its position to “neutral.”
Under the amendments to California Senate Bill 459, any company found to have violated the law by engaging in willful misclassification of independent contractors will have to post a “notice” on its website or in its office so that employees can see it. If applicable, the notice must say that the employer has violated the law, that the firm has changed its business practices to avoid committing further violations, and that employees who feel they are being misclassified should contact the Division of Labor Standards Enforcement, the Employment Development Department, or the Franchise Tax Board.
Schwartz said the law as written now will no longer affect broker/dealers because, he believes, independent FAs are properly classified. In a letter to the California State Assembly, SIFMA outlined the characteristics of independent b/d reps that distinguish them from other independent contractors, saying that reps are sophisticated, highly educated entrepreneurs who operate as small independent businesses with their own offices, staff and operational expenses.
Still, under the common law definition, independent b/d advisors could qualify as employees. To figure out which bucket a worker falls into, you must ask three questions, according to the IRS. The first is behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job? The second is financial: Are the business aspects of the workers' jobs controlled by the payer? These include things like how the worker is paid, whether expenses are reimbursed, who provides tools and supplies. And the third is what type of relationship the individual has with the firm: Are there written contracts or employee-type benefits? Will the relationship continue and is the work performed a key aspect of the business?
When describing the relationship between advisors and b/ds, the answer to some of these questions might be yes. For example, b/ds are responsible for supervising their independent reps' activities, control certain ways in which the workers are paid and what expenses are reimbursed, and their relationships are governed by written contracts.
Willful Misclassification
SIFMA was also pleased with the amendments. “We have always said that willful misclassification was not an issue for our industry,” said Kim Chamberlain, managing director and counsel, state government affairs for SIFMA. “Our primary concern was the additional administrative burdens and those have been eliminated.”
Before the amendments, the industry was concerned that if the bill was passed, other states might follow suit with extra paperwork and compliance burdens related to independent contractor status. In its previous form, the bill required that firms submit additional disclosures to independent contractors about their independent contractor status, and it required the maintenance of records of independent contractors for at least two years. Now, Schwartz said, if the issue comes up in another state, FSI can point to the California bill—if it passes, that is.
The California Appropriations Committee will hold a hearing Wednesday, and Schwartz expects the bill to be placed in “suspense file,” meaning it will be reviewed for fiscal implications to the state. If the bill goes through the Committee, it then has to be passed by the Assembly and then signed by the governor.
Civic engineers get FSI training in Mumbai
Civic engineers attended workshops to deal with projects by using the proposed floor space index (FSI) policy.
Last month, municipal commissioner Subodh Kumar proposed to charge 100% premium on the 25% additional space utilised by builders above the sanctioned FSI in their projects. These areas include staircases, flower beds, balconies, car decks and terraces. The government has already issued notification and invited suggestions and objections.
R Kuknur, chief engineer of BMC’s development planning department, said they conducted a one-week workshop to train building proposal department engineers on the policy.
“Our focus is on the use of the proposed FSI, transport of development right, Maharashtra Regional Development Act and so on,” he said.
Building proposals and developmental planning department officials said the norms are quite complicated. “It needs training to understand the issues so that BMC engineers will able to use the FSI, its concession and free-of-FSI components,” said a senior official, requesting anonymity.
Ramesh Jadhav, an engineer in the building proposal department, said the BMC should conduct such workshops regularly. “Urbanisation is changing each day and we should have rules to deal with changing city design. We will be able to stop the loot of FSI and TDR misuse and other government rules,” he said.
FSI Announces Second Quarter, 2011 Financial Results
VICTORIA, British Columbia, Aug 15, 2011 (BUSINESS WIRE) -- FLEXIBLE SOLUTIONS INTERNATIONAL, INC. /quotes/zigman/249475/quotes/nls/fsi FSI -6.62% (frankfurt:FXT), is the developer and manufacturer of biodegradable and environmentally safe water and energy conservation technologies, as well as oil field anti-scalant, detergent, water and agricultural technologies. Today the Company announces financial results for the second quarter (Q2) ended June 30, 2011.
Mr. Daniel B. O'Brien, CEO, states, "This quarter was significant for the Company in demonstrating our continued strong growth. Quarter over quarter sales are expected to track higher for the rest of the year. It is important to note that FSI has attained a $1.5million revolving line of credit (LOC) at 4%. The availability of this LOC for working capital purposes is not evident in the 'Cash and cash equivalent' section of the balance sheet."
-- Sales in Q2 were $3,930,075, up approximately 39% when compared to sales of $2,833,552, in the corresponding period a year ago. The result was a GAAP net profit of $174,734, or $0.01 per share, compared with a net loss of $133,590, or $0.01 per share, in Q2, 2010. See the financial statements regarding the significant increase in income tax expense taken in Q2.
-- Basic weighted average shares used in computing per share amounts in Q2 were 13,169,991 for 2011 and 13,962,567 for 2010. See note 'h' attached to the table on the following page with respect to change in shares outstanding.
-- Non-GAAP operating cash flow: For the 6 months ending June 30, 2011, net income reflects $235,266 of non-cash charges (depreciation and stock option expenses), $615,000 of income tax, as well as $443,488 in new factory development costs and interest expense. These items are either non-cash items or items not related to operations or current operating activities of the Company. When these items are removed, the Company shows operating cash flow of $1,826,595, or $0.14 per share. This compares with operating cash flow of $1,519,523, or $0.11 per share, in the corresponding 6 months of 2010 (see the table that follows for details of these calculations).
Mr. O'Brien continues, "The Company will continue to update the progress of the sugar to aspartic acid plant in Alberta, on a timely basis. Production from the Alberta plant will allow FSI to supply the only renewably-based poly-aspartic acid in the world. This will allow access to customers who demand this level of environmentally sound behavior as well as insulating the company from future oil price shocks."
The NanoChem division continues to contribute most of our sales and cash flow, and new opportunities are unfolding to further increase sales in this division. NanoChem sales have been less seasonal than those of our WaterSavr and Flexible Solutions Ltd divisions. This has lead to less volatility in total revenue figures quarter over quarter. However, in the future, Q1 and Q2 sales may be much larger than sales in Q3 and Q4. This is largely due to potential growth in agricultural product sales (sales which tend to be larger in Q1 and Q2).
* CEO, Dan O'Brien has scheduled a conference call for 11:00am EST, 8:00am PST, Tuesday August 16th to discuss the financials. Call 1-877-941-0844 (or 1-480-629-9835). The conference call title, "Second Quarter Financials," may be requested.*
(TABLE FOLLOWS)
The above information and following table contain supplemental information regarding income and cash flow from operations for the 6 months ended June 30, 2010 and June 30, 2011. Adjustments to exclude depreciation, stock option expenses and one time charges are given. This financial information is a Non-GAAP financial measure as defined by SEC regulation G. The GAAP financial measure most directly comparable is net income. The reconciliation of each of the Non-GAAP financial measures is as follows:
FLEXIBLE SOLUTIONS INTERNATIONAL, INC.
Consolidated Statement of Operations
For 3 Months Ended June 30 (6 Months Operating Cash Flow)
(Unaudited)
3 months ended June 30
2011 2010
---------------- ----------
Revenue $ 3,930,075 $ 2,833,552
Net income (loss) before income tax - GAAP $ 469,734 $ 279,490
Income tax $ 295,000 $ 413,080 a
Net income (loss) - GAAP $ 174,734 $ (133,590)
Net income (loss) per common share - basic. - GAAP $ 0.01 $ (0.01)
3 month weighted average shares outstanding - basic. GAAP b 13,962,567 b
13,169,991
---------------- - ---------- -
6 month Operating Cash Flow
Ended June 30
-----------------------------------
Operating Cash flow (6months). NON-GAAP $ 768,107 c $ 623,261 d
Operating Cash flow excluding certain non-operating
items and items not related to current operations
(6 months). NON-GAAP $ 1,826,595 e $ 1,519,523 f
Operating Cash flow per share excluding
non-operating items and items not related to
current operations (6 months) - basic. NON-GAAP $ 0.14 e $ 0.11 f
Non-cash Adjustments (6 month) $ 235,266 g $ 241,179 g
Shares (6 month basic weighted average) used in
computing per share amounts - basic GAAP 13,353,904 h 13,962,567 h
Notes: certain items not related to "operations" of the Company have been excluded from net income as follows.
a) Income tax -- accounting adjustment to second quarter income tax. Income during the first six months was higher than expected resulting in higher income tax expense.
b) See the financials for diluted earnings per share.
c) Non-GAAP - amounts exclude certain non-cash items (depreciation and stock option expense totaling $235,266)
d) Non-GAAP - amounts exclude certain non-cash items (depreciation and stock option expense totaling $241,179)
e) NON-GAAP amounts exclude certain non-cash items and items not related to operations or current operating activities (depreciation, stock option expense ($235,266), income tax of $615,000, and new factory construction costs ($443,488).
f) Non-GAAP - amounts exclude certain non-cash items and items not related to operations or current operating activities (depreciation, stock option expense ($241,179), income tax of $482,080, and new factory construction costs ($414,182).
g) Non-GAAP -- amounts represent depreciation and stock option expense
h) Significant change in 2011 shares outstanding was due to repurchase and cancellation of 792,576 shares. See the Consolidated Balance Sheet for shares outstanding.
Safe Harbor Provision
The Private Securities Litigation Reform Act of 1995 provides a "Safe Harbor" for forward-looking statements. Certain of the statements contained herein, which are not historical facts, are forward looking statement with respect to events, the occurrence of which involve risks and uncertainties. These forward-looking statements may be impacted, either positively or negatively, by various factors. Information concerning potential factors that could affect the company is detailed from time to time in the company's reports filed with the Securities and Exchange Commission.
Flexible Solutions International 615 Discovery Street, Victoria, BC V8T 5G4 CANADA
If you have received this news release by mistake or if you would like to be removed from our update list please reply to: laura@flexiblesolutions.com
To find out more information about Flexible Solutions and our products, please visit www.flexiblesolutions.com .
SOURCE: Flexible Solutions International, Inc.
Flexible Solutions International, Inc.
Jason Bloom
Tel: 250 477 9969
Toll Free: 800 661 3560
Fax: 250 477 9912
E-mail: info@flexiblesolutions.com
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